The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Allahabad, has set aside a service tax demand of ₹2.31 crore after finding that the department issued separate show cause notices against three registrations linked to the same PAN without verifying or correlating the receipts with the activities conducted from each registered premises.

The Bench of P.A. Augustian (Judicial Member) and Sanjiv Srivastava (Technical Member) observed that it was difficult to understand how multiple notices could be issued on the basis of the same Form 26AS information against three registered premises of the same person.

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Taking note of two earlier adjudication orders in which demands arising from the same information had already been dropped, the Tribunal held that the subsequent order confirming the demand had no merit.

The dispute concerned the financial year 2016-17. The department received information from the Directorate General of Analytics and Risk Management indicating that receipts of ₹15.39 crore were reflected against the assessee’s PAN in Form 26AS.

According to the department, the corresponding value had not been disclosed in the assessee’s service tax returns. A communication was consequently issued asking the assessee to provide income-tax returns, Form 26AS, balance sheets, reconciliation statements and supporting documents.

The department alleged that the assessee neither responded to the communication nor furnished the requested records. It accordingly treated the entire amount of ₹15.39 crore appearing in Form 26AS as consideration for undeclared taxable services.

A show cause notice dated October 22, 2021 proposed recovery of ₹2,30,92,994 as service tax, along with interest and penalties, under the Finance Act, 1994 read with the transitional provisions of the Central Goods and Services Tax Act, 2017.

The Commissioner confirmed the entire service tax demand under the extended limitation period prescribed by the proviso to Section 73(1) of the Finance Act, 1994.

Besides ordering recovery of interest under Section 75, the adjudicating authority imposed an equal penalty of ₹2,30,92,994 under Section 78. Separate penalties of ₹10,000 each were also imposed under Sections 77(1)(c) and 77(2) of the Finance Act.

The order proceeded ex parte on the ground that the assessee had failed to file a reply or attend the scheduled personal hearings.

The assessee challenged the order before CESTAT, arguing that the department had already initiated proceedings for the same period and on the same ground, and that those proceedings had been dropped through two earlier orders.

During its examination of the records, the Tribunal found that the person holding PAN AIEPB0927D had three service tax registrations connected with different premises and names:

• One registration in the name of Ram Kishan Bairwa at Indirapuram, Ghaziabad.
• A second registration in the name of Vishal Associates at Khora Colony, Ghaziabad.
• A third registration in the name of Vishal Associates at Sector 56, Noida.

The information received from the Income Tax Department was related to the common PAN. However, the tax authorities processed that information separately against all three service tax registrations.

The Tribunal found that the entire receipt of ₹15.39 crore reflected in Form 26AS was attributed separately to each registration as undisclosed taxable receipts, leading to multiple proceedings arising from the same underlying data.

CESTAT noted that the Principal Commissioner, CGST, Noida, had already considered the difference between the figures appearing in the income-tax records and the service tax returns for financial years 2015-16 and 2016-17.

For 2016-17, the earlier proceedings covered the same differential value of ₹15.39 crore and the same proposed service tax liability of ₹2.31 crore. Those proceedings were dropped through an Order-in-Original dated January 28, 2022.

The Tribunal further found that another proceeding had been initiated against a separate registration linked to the same PAN. That demand was also dropped by the Commissioner through an order dated May 27, 2022.

In that order, the Commissioner recorded that the assessee had surrendered the concerned Ghaziabad registration in February 2015 after shifting to Noida. The Commissioner also recognised that the demand for 2016-17 had already been covered by the January 2022 order passed by the Noida Commissionerate.

The Tribunal strongly questioned the departmental approach of issuing separate show cause notices to all the registrations linked to the same PAN.

“It is not understood how, so many show cause notices were issued to the same PAN Number in respect of the three registered premises separately,” the Tribunal observed.

CESTAT found that the demands were raised in all three cases without undertaking any verification. The department did not establish which registration or business premises had actually provided the services corresponding to the amounts appearing in Form 26AS.

The Tribunal also noted that the notices were issued without correlating the receipts with any particular activity carried on by the assessee from the respective registered premises.

Merely because the same PAN was linked with three service tax registrations, the department could not attribute the entire Form 26AS amount independently to each registration and demand service tax multiple times on the same receipts.

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